U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB/A
(Mark One)
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (Fee Required)
For the fiscal year ended December 31, 2003
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (No Fee Required)
For the transition period from _________ to _________
Commission file number 0-24930
CTD HOLDINGS, INC.
(Name of small business issuer in its charter)
FLORIDA 59-3029743
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27317 N. W. 78th Avenue, High Springs, FL 32643
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 386-454-0887
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
Class A Common Stock
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No----.
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB ( )
State issuer's revenues for its most recent fiscal year: 396,428.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference at the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $1,424,349 based on the average high ($.50) and low ($.40) price as of
March 26, 2004, of $.45 per share.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: 5,791,220 shares of Common Stock
as of March 26, 2004.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format (Check One): Yes No X
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Our cash and cash equivalents decreased to approximately $8,000 as of December
31, 2003 compared to approximately $46,000 as of December 31, 2002. This
decrease was simply a timing issue around the receipt of a large receivable
payment as reflected in the $134,000 accounts receivable balance. Current assets
as of December 31, 2003 were actually 50% higher than the year before.
As of December 31, 2003, our net working capital was approximately $170,000
compared to approximately $115,000 at the end of 2002. The improvement in
working capital resulted from net income for the year and $25,000 in a current
deferred tax asset.
We believe that working capital will continue to improve in 2004 as a result of
the continued expansion of the Cyclodextrin industry while we maintain overhead
costs at a minimum.
During 2003, we began renovating and updating our corporate offices and have
invested approximately $50,000 through December 31, 2003. We plan to invest an
additional $15,000 to complete these renovations during 2004.
We refinanced our mortgage on the 40-acre property at a more favorable variable
interest rate, resulting in a 3% decline in the effective rate. This change
reduced interest expense and increased cash flow.
Results of Operations
Sales of Cyclodextrins and related manufactured complexes are historically
highly volatile. In efforts to offset this volatility, we continue to expand our
revenue producing activities in Cyclodextrin related research and development
services for unrelated companies while expanding our line of distributed
products. Our product sales are primarily to large pharmaceutical, food, and
diagnostics companies for research and development purposes.
Total product sales for 2003 were approximately $395,000, a 24% decrease over
2002 sales of $522,000. This change can be attributed to the normal volatility
of our sales. Our major customers continue to buy products consistently. In
2002, 4 companies accounted for 75% of our business. In 2003, 3 companies
accounted for 74% of our sales revenues; one company alone accounted for 43% of
sales. These major companies continue to buy from us and they're continuing to
buy more. This growing business from repeat customers occurred with the smaller
volume customers as well. In 2003, more than 50% of the Company's customers
either increased or maintained their purchase levels.
Our gross profit margin of more than 88% remained consistently strong for 2003
compared to 84% for 2002.
Our SG&A expenses increased to approximately $287,000 in 2003 from approximately
$240,000 in 2002 primarily as a result of the issuance of a stock bonus of
$50,000 to the President/CEO and the one-time expenses of approximately $35,000
for PR/IR services, partially offset by further reductions in overhead.
Total other expenses decreased to approximately $17,000 in 2003 compared to
approximately $32,000 in 2002. This decrease due to our refinancing our mortgage
during 2003 and reducing our interest expense. We also had a loss on equipment
disposals in 2002 that did not reoccur in 2003.
Based on our profitability for 2003 and 2002, we revaluated our valuation
allowance on our deferred tax asset. Our deferred tax asset is based on our net
operating loss carryforward. We determined that our valuation allowance should
be reduced form 100% to 35%, resulting in an income tax benefit of $225,000 for
2003.
We will continue to introduce new products that will increase sales revenue and
implement a strategy of creating or acquiring operational affiliates and/or
subsidiaries that will use CD's in herbal medicines, waste-water remediation,
pharmaceuticals, and foods. We also intend to pursue exclusive relationships
with major CD manufacturer(s) and specialty CD labs to distribute their
products. In 2002, we became the exclusive distributor in North America of the
CD products manufactured by Cyclolab Research Laboratories in Budapest, Hungary.
In keeping with its commitment to use the internet as a major advertising and
public relations outlet, we continue to maintain our web site. This asset has
been instrumental in creating and maintaining a worldwide leadership role for us
in the implementation of research and commercialization of CD applications. We
believe that the maintenance and growth of our web site will return that
investment many times.
Forward-looking Statement
All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to update publicly
any forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties, including, but not limited to, the following:
demand for Cyclodextrins; changes in governmental law and regulations
surrounding various matters, such as labeling disclosures; production and
pricing levels of important raw materials; and difficulties of delays in the
development, production, testing and marketing of products; product margins and
customer product acceptance.
Item 7. Financial Statements
[LETTERHEAD OF JAMES MOORE & CO.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
CTD Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of CTD Holdings,
Inc. and subsidiaries as of December 31, 2003, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 2003 and 2002. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CTD Holdings, Inc.
and subsidiaries as of December 31, 2003, and the results of its operations and
its cash flows for the years ended December 31, 2003 and 2002, in conformity
with accounting principles generally accepted in the United States of America.
As described in Note 1(n) to the consolidated financial statements, the
accompanying consolidated financial statesments of CTD Holdings, Inc. as of
December 31, 2003 and for the year then ended, have been restated.
/s/James Moore & Company
January 14, 2004 (August 19, 2004, as to the effects
of the restatements described in Note 1).
Gainesville, Florida
F - 1
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
(as restated)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,757
Accounts receivable 134,022
Inventory 79,183
Deferred tax asset 25,000
-------------
Total current assets 245,962
-------------
PROPERTY AND EQUIPMENT, NET 379,300
-------------
OTHER
Intangibles, net 14,476
Deferred tax asset 200,000
-------------
Total other assets 214,476
-------------
TOTAL ASSETS $ 839,738
=============
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-2
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2003
(as restated)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 45,791
Current portion of long-term debt 9,941
Current portion of stockholder loan 20,000
-------------
Total current liabilities 75,732
-------------
LONG-TERM LIABILTIES
Long-term debt, less current portion 161,003
Due to stockholder, less current portion
59,967
-------------
Total long-term liabilities 220,970
-------------
STOCKHOLDERS' EQUITY
Class A common stock, par value $.0001 per share, 100,000,000 shares
authorized, 5,791,220 shares issued
and outstanding 580
Class B non-voting common stock, par
value $ .0001 per share, 10,000,000 shares -
authorized, 0 shares issued and outstanding
Additional paid-in capital 2,029,398
Accumulated deficit (1,486,942)
-------------
Total stockholders' equity 543,036
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 839,738
=============
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-3
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
(as restated)
------------- -------------
PRODUCT SALES $ 394,532 $ 522,372
COST OF PRODUCTS SOLD 45,433 84,483
------------- -------------
GROSS PROFIT 349,099 437,889
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 286,724 240,536
------------- -------------
INCOME FROM OPERATIONS 62,375 197,353
------------- -------------
OTHER INCOME (EXPENSE)
Investment and other income 6,973 23,251
Interest expense (22,599) (30,924)
Loss on disposal of equipment - (24,100)
------------- -------------
Total other income (expense) (15,626) (31,773)
------------- -------------
INCOME BEFORE INCOME TAXES 46,749 165,580
INCOME TAXES 225,000 -
------------- -------------
NET INCOME $ 271,749 $ 165,580
============= ============
NET INCOME PER COMMON SHARE: $ .05 $ .03
------------ ------------
Weighted average number of
common shares outstanding 5,004,919 4,791,220
============ ============
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-4
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
COMMON STOCK ADDITIONAL TOTAL
PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- ----------- ------------ ------------- ------------
Balance, December 31, 2001 4,791,220 $ 480 $ 1,954,498 $ (1,924,271) $ 30,707
Net Income - - - 165,580
165,580
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2002 4,791,220 480 1,954,498 (1,758,691) 196,287
Shares issued for services 1,000,000 100 49,900 - 50,000
Company expenses paid by
Stockholder - - 25,000 - 25,000
Net Income -- as restated - - - 271,749 271,749
------------ ------------ ------------- ------------ ------------
Balance, December 31, 2003
-- as restated 5,791,220 $ 580 $ 2,029,398 $(1,486,942) $ 543,036
============ ============ ============= ============ ============
The accompanying notes to consolidated financial statements are an integral part of these statements.
F-5
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECEMBER 31, 2003 AND 2002
Increase (Decrease) in Cash and Cash Equivalents
2003 2002
(as restated)
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 271,749 $ 165,580
----------- -----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 28,543 24,190
Deferred income taxes (225,000) -
Loss on disposal of equipment - 24,100
Valuation allowance - 12,907
Stock issued for services 50,000 -
Company expenses paid by shareholder 25,000 -
Bad debts 4,854 -
Increase in accounts receivable (97,741) (18,575)
Increase in inventory (15,037) (32,181)
Decrease (Increase) in other current assets - 1,305
Increase (decrease) in accounts payable
and accrued expenses 22,596 (129,195)
---------- ----------
Total adjustments (206,785) (117,449)
---------- ----------
Net cash provided by operating activities 64,964 48,131
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (54,716) (17,877)
Purchase of intangibles (11,174) -
Other - 748
----------- ---------
Net cash used for investing activities (65,890) (17,129)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on long-term debt (8,628) (8,199)
Payments on loan from stockholder, net (28,933) 13,005
Proceeds from sale of equipment - 21,877
Net payments on line of credit - (19,631)
---------- --------
Net cash provided (used for) by financing
activities (37,561) 7,052
---------- --------
Net increase (decrease) in cash and cash equivalents (38,487) 38,054
CASH AND CASH EQUIVALENTS, beginning of year 46,244 8,190
------------ ---------
CASH AND CASH EQUIVALENTS, end of year $ 7,757 $ 46,244
=========== ==========
F-6
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECEMBER 31, 2003 AND 2002
Increase (Decrease) in Cash and Cash Equivalents
(Continued)
2003 2002
(as restated)
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 13,472 $ 30,924
=========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITY
Vehicle acquired with debt financing $ 14,881 $ -
=========== ============
Common stock issued for services $ 50,000 $ -
=========== ============
Company expenses paid by shareholder $ 25,000 $ -
=========== ============
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-7
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the more significant accounting policies of CTD
Holdings, Inc. and Subsidiary (the Company) that affect the accompanying
consolidated financial statements:
(a) ORGANIZATION AND OPERATIONS - The Company was incorporated in August
1990, as a Florida corporation with operations beginning in July 1992. The
Company is engaged in the marketing and sale of cyclodextrins and related
products to food, pharmaceutical and other industries. The Company also provides
consulting services related to cyclodextrin technology.
(b) BASIS OF PRESENTATION - The consolidated financial statements include
the Company and its wholly owned subsidiary. All intercompany accounts and
transactions have been eliminated.
(c) CASH AND CASH EQUIVALENTS - For the purposes of reporting cash flows,
the Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
(d) ACCOUNTS RECEIVABLE - Accounts receivable are stated at the amount
management expects to collect from outstanding balances. Based on management's
assessment of the credit history with customers having outstanding balances and
current relationships with them, it has concluded that realization losses on
balances outstanding at year-end will be immaterial.
(e) PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.
Depreciation on property and equipment is computed using primarily the
straight-line method over the estimated useful lives of the assets, which range
from three to forty years. In accordance with Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of," the Company periodically reviews its
long-lived assets to determine if the carrying value of assets may not be
recoverable. If an impairment is identified, the Company recognizes a loss for
the difference between the carrying amount and the estimated value of the asset.
(f) INVENTORY - Inventory consists of cyclodextrin products purchased for
resale and chemical complexes. Inventory is recorded at the lower of cost
(first-in, first-out) or market.
(g) INTANGIBLES - Intangible assets consist of loan costs and other
intangibles recorded at cost. Intangible are amortized using the straight-line
method over their respective estimated useful lives.
(h) REVENUE RECOGNITION - Revenues are recognized when products are
shipped.
(i) ADVERTISING - Advertising costs are charged to operations when
incurred.
(j) START-UP COSTS - Start-up costs are expensed as incurred.
(k) NET INCOME (LOSS) PER COMMON SHARE - Net income (loss) per common share
is computed in accordance with the requirements of Statement of Financial
Accounting Standards No. 128 (SFAS 128). SFAS 128 requires net income (loss) per
share information to be computed using a simple weighted average of common
shares outstanding during the periods presented.
F-8
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(l) RECLASSIFICATIONS - Certain amounts in the 2002 financial
statements have been reclassified for comparative purposes to conform with the
2003 presentation.
(m) USE OF ESTIMATES - The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
(n) RESTATEMENT -- In August 2004, the Company restated its 2003 financial
statements to write off previously deferred consulting fees in the amount of
$23,229. As a result, net income decreased by $23,229 and net income per share
decreased $.01 for the year ended December 31, 2003.
(2) COMMITMENTS:
Rent expense under all operating leases was $6,345 and $11,251 for 2003 and
2002, respectively.
(3) PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2003, consists of:
Land $ 80,000
Buildings and improvements 211,606
Machinery and equipment 84,704
Office furniture and equipment 49,738
------------
426,048
Less: accumulated depreciation 97,564
------------
328,484
Construction in progress 50,816
------------
Property and equipment, net $ 379,300
============
The carrying value of remaining idle long-lived assets related to a former
mushroom farming operation was approximately $ 120,000 at December 31, 2003.
(4) CONCENTRATIONS OF CREDIT RISK:
Significant concentrations of credit risk for all financial instruments owned by
the Company, are as follows:
(a) DEMAND DEPOSITS - The Company has demand deposits in a financial
institution that are insured by the Federal Deposit Insurance Corporation up to
$100,000. At December 31, 2003, the bank balance was $8,444. The Company has no
policy of requiring collateral or other security to support its deposits.
(b) ACCOUNTS RECEIVABLE - The Company's accounts receivable consist of
amounts due primarily from food and pharmaceutical companies located primarily
in the United States and the United Kingdom. One major customer accounted for
90% of the accounts receivable balance at December 31, 2003. The Company has no
policy requiring collateral or other security to support its accounts
receivable.
F-9
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(5) MAJOR CUSTOMERS AND SUPPLIERS:
Sales to three customers (Sigma Chemical Company, Dade Behring and AstraZeneca,
Inc.) in 2003 represented approximately 74% of total sales. Sales to four
customers (Ben Venue Laboratories, Sigma Chemical Company, Dade Behring and
AstraZeneca, Inc.) in 2002 represented approximately 75% of total sales.
Purchases from two suppliers in 2003 represented approximately 80% of total
costs of products sold. Purchases from four suppliers in 2002 represented
approximately 69% of total costs of products sold.
(6) LONG-TERM DEBT:
Long-term debt consists of the following as of December 31, 2003:
Mortgage note payable to bank, payments of $1,263 due monthly including
principal and interest at 5%, collateralized by land and buildings
with a cost of $210,000 $ 157,796
Note payable to financing company, payments of
$288 due monthly, including principal and interest,
at 6%, collateralized by vehicle with a cost
of $14,881 13,148
-----------
Total long-term debt 170,944
Less current portion 9,941
-----------
Long-term debt, less current portion $ 161,003
===========
Maturities on long-term debt as of December 31, 2003 over the next five years
are as follows:
Year ending
December 31, Amount
2004 $ 9,941
2005 10,713
2006 11,294
2007 11,907
2008 10,504
2009 and thereafter 116,585
---------
$ 170,944
=========
(7) RELATED PARTY TRANSACTIONS:
The majority stockholder periodically advances the Company loans. The Company
owes the stockholder $79,967 at December 31, 2003. The loan is unsecured and
interest accrues at 5%. Interest expense related to the loan totaled $9,127 and
$11,263 for the years ended December 31, 2003 and 2002, respectively. Principal
payments are $5,000 per quarter.
F-10
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(8) FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107 "Disclosures about Fair
Value of Financial Instruments" requires disclosure of fair value to the extent
practicable for financial instruments, which are recognized or unrecognized in
the consolidated balance sheet. The fair value of the financial instruments
disclosed herein is not necessarily representative of the amount that could be
realized or settled, nor does the fair value amount consider the tax
consequences of realization or settlement. The following table summarizes
financial instruments by individual balance sheet account as of December 31,
2003:
CARRYING FAIR
AMOUNT VALUE
---------- ---------
FINANCIAL ASSETS
Cash and cash equivalents $ 7,757 $ 7,757
Accounts receivable 134,022 134,022
---------- ---------
Total financial assets $ 141,779 $ 141,779
========== =========
FINANCIAL LIABILITIES
Accounts payable and accrued expenses $ 45,791 $ 45,791
Long-term debt 170,944 170,944
Due to stockholder 79,967 79,967
---------- ---------
Total financial liabilities $ 296,702 $ 296,702
========== =========
The fair value of all financial instruments approximates carrying value due to
the short-term maturity of the instruments.
(9) INCOME TAXES:
The Company follows the provisions of Statement of Financial Accounting Standard
No. 109 "Accounting for Income Taxes." Differences between accounting rules and
tax laws cause differences between the basis of certain assets and liabilities
for financial reporting purposes and tax purposes. The tax effect of these
differences, to the extent they are temporary, is recorded as deferred tax
assets and liabilities. Income tax expense is the tax payable or refundable for
the period plus or minus the change during the period in deferred assets and
liabilities. Temporary differences which give rise to deferred tax assets and
liabilities consist of net operating loss carryforwards, accelerated
depreciation methods for income tax purposes and interest accrued to related
parties but not for tax purposes until paid.
The Company has available at December 31, 2003, unused operating loss
carryforwards totaling approximately $ 1,483,000 that may be applied against
future taxable income. If not used, the carryforwards will expire as follows:
Year Ending
December 31, Amount
----------------- -----------------
2009 $ 730,000
2010 195,000
2017 206,000
2020 281,000
2021 71,000
-----------------
Total $ 1,483,000
=================
F-11
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
If all of the operating loss carryforwards and temporary deductible differences
were used, the Company would realize a deferred tax asset of approximately $
350,000 based upon expected income tax rates. Under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", the deferred tax
asset should be reduced by a valuation allowance if it is likely that all or a
portion of it will not be realized. Realization depends on generating sufficient
taxable income before the expiration of the loss carryforwards.
At December 31, 2002, management determined that a 100% valuation allowance was
appropriate. For 2003 and 2002, the Company realized net income and utilized
approximately $260,000 of its net operating loss carryforward to offset its
current income tax liabilities. Management expects to maintain continued
profitability in the future and realize additional benefits of its net operation
loss carryforwards. At December 31, 2003 Management determined that a reduction
in the valuation allowance to 35% from 100% of the future tax benefit is
appropriate. Accordingly, the Company has recognized a $225,000 deferred tax
asset and the resulting income tax benefit in 2003 to reflect this change in
estimate. Because of the inherent uncertainties in estimating the valuation
allowance on the deferred tax asset, it is at least reasonably possible that the
Company's estimated deferred tax asset will change in the near term and be
material to the financial statements.
2003 2002
----------- ------------
Current income tax expense $ (17,000) $ (53,000)
Tax benefit of temporary differences - 5,000
Tax benefit of operating loss carryforwards 17,000 48,000
Effect of decrease in valuation allowance 225,000 -
----------- ------------
Total net tax benefit (expense) $ 225,000 $ -
=========== ============
(10) SIGNIFICANT FOURTH QUARTER ADJUSTMENTS
During the fourth quarter of 2003, the Company determined its valuation
allowance on its deferred tax asset resulting from net operating loss
carryforwards to be lower than previously recorded and reduced the valuation
allowance from 100% to 35%, resulting in an income tax benefit of $225,000 in
the fourth quarter of 2003.
(11) CAPITAL TRANSACTIONS
The Company engaged a consultant to perform services over a six month period.
The majority stockholder (and President) transferred 500,000 shares of CTDH
stock valued at $25,000 to the consultant on behalf of the Company. The
consulting fee was expensed by the Company and recorded as capital contribution
by the stockholder.
The Company issued 1,000,000 shares registered under Form S-8 to its President
as a bonus. The stock was valued at $50,000 when awarded and was expensed.
F-12
PART IV.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits Page
(1) Reports of Independent Certified Accountants F-1
(2) Financial Statements F-2
Exhibits required by Item 601, Regulation S-B:
(3) Articles of incorporation and by-laws
(a) Articles of Incorporation filed August 9, 1990 * None
(b) By-Laws. * None
(c) Certificates of Amendment to the Articles of
Incorporation filed November 18, 1993 and
September 24, 1993. * None
(4) Instruments defining the rights of security
holders, including indentures
(a) Specimen Share Certificate for Common Stock. * None
(9) Voting Trust Agreement None
(10) Material Contracts
(10.1) Agreement of Shareholders dated November 11, 1993
by and among C.E. Rick Strattan, Garrison Enterprises,
Inc. and the Company. * None
(10.2) Lease Agreement dated July 7, 1994**. None
(10.3) Consulting Agreement dated July 29, 1994 between
the Company and Yellen Associates. * None
(10.4) License Agreement dated December 20, 1994 between
the Company and Herbe Wirkstoffe GmbH. * None
(10.5) Joint Venture Agreement between the Company and
Ocumed, Inc. dated May 1, 1995, incorporated by
reference to the Company's Form 10-QSB for the
quarter ended June 30, 1995.** None
(10.6) Extension of Agreement between the Company and Herbe
Wirkstoffe GmbH.*** None
(10.7) Lease Extension+
(10.8) Loan Agreement with John Lindsay+
(10.9) Small Potatoes Contract+
(10.10) Employment Agreement with C.E. Rick Strattan dated
May 30, 2001++
(10.11) Employment Agreement of C.E. Rick Strattan dated
October 14, 2003+++
(10.12) Employment Agreement of George L. Fails dated
October 14, 2003****
(11) Statement re: Computation of Per Share Earnings Note 1(k)
to Financial
Statements
(16) Letter on changes in certifying accountant*** None
(18) Letter on change in accounting principles None
(22) Subsidiaries of Registrant None
(23) Published Report re: Matters Submitted to Vote of
Security Holders None
(24) Consents of Experts and Counsel None
(25) Power of Attorney None
(27) Financial Data Schedule
(28) Additional Exhibits None
(29) Information from reports furnished to state insurance
regulatory authorities None
(99.1) Certificate of Chief Executive Officer
and Chief Financial Officer****
(99.2) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002****
(b) Reports on Form 8-K:
None
* Incorporated by reference to the Company's Form 10-SB filed with the
Securities and Exchange Commission on February 1, 1994.
** Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on March 29, 1997.
*** Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on March 28, 2000.
**** Filed herewith.
+ Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on April 2, 2001.
++ Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on April 1, 2002.
+++ Incorporated by reference to Form S-8 filed December 1, 2003.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to
Form 10-KSB to be signed on its behalf by the undersigned, thereunto duly
authorized on August 19, 2004.
CTD HOLDINGS, INC.
/s/ C.E. RICK STRATTAN
---------------------------------
C.E. RICK STRATTAN
Chief Executive Officer
In accordance with the requirements of the Exchange Act, this Amendment
No. 1 to Form 10-KSB has been signed by the following persons in the capacities
indicated on August 19, 2004.
SIGNATURE TITLE
/s/ C.E. RICK STRATTAN
________________________________ Chief Executive Officer, President
C.E. RICK STRATTAN Chief Financial Officer, Director
/s/ GEORGE L. FAILS
________________________________ Director
GEORGE L. FAILS